Integrator Connection: Fast-Growing Minnow Eating the Whales

“We’ve been a security-as-a-service company since day one. We are all about the cloud — it is in our DNA. Security as a service is what we do,” says Mark D. Ein, chairman of Kastle Systems.

When it comes to growth, few security companies can rival Kastle Systems International. The Falls Church, Va., firm, which specializes in commercial real estate and business properties, has purchased several firms in the security arena, getting some from the true giants of the industry.

Late last year, Kastle acquired both New York-based Mutual Central Alarm Services and Stat-Land Security Systems from ADT. The acquisitions will open up new growth for the company, which is known for its large footprint in the commercial real estate sector. Earlier, in May 2013, Kastle acquired CheckVideo, a cloud-based video surveillance and alarm verification solution provider.

While the company prides itself on its access control, intrusion detection and video surveillance offerings, it has become one of the faster-growing, more aggressive companies in the industry. The heart of its model has been business real estate and commercial property. Kastle claims to protect 79 percent of the nation’s top 200 law firms, for example. “We’ve been a security-as-a-service company since day one,” says Mark D. Ein, chairman. “We are all about the cloud — it is in our DNA. Security as a service is what we do.”

Ein says the ADT properties simply fit what Kastle needed. “We just bought a small piece from them,” he says. “You will see it where a big company will have pieces of business that don’t fit their current focus or strategy. So they look for an opportunity to find them another home.”

ADT certainly is not focused on the commercial market as Kastle is. Acquisition of Mutual Central and Stat-Land allowed Kastle to add scale and value to its New York area operations. It all is part of a long-term plan and process.

Business Growth

Kastle was founded in 1973. Ein bought the company from its founder, Jene Samburg, in Jan. 2007. A self-described “company builder,” Ein’s background is in telecommunications and technology. “Security has characteristics of the most attractive industries and companies I’ve seen,” Ein says.

For him, that means an industry with a technology basis and the ability to grow. Currently, Kastle serves clients in almost every state and has eight offices nationwide. The company has four central stations, with locations in New York City, Washington, D.C., Houston and Sydney, Australia.

Australia? The Sydney operations came because the previous owner had relationships “down under” and saw an opportunity to develop a business there. “It’s a nice market for us,” Ein says.

Identifying markets is not his biggest challenge; rather, it is finding good people. “We are blessed to have a strong team. That is the key to success in any business,” Ein says. “When things go well, it’s because you have the right people. When you do not, you will have problems.”

Kastle is the base for all of the people. “From the beginning, the idea was to use Kastle as a platform company to build a great, fast-growing company in the security area,” Ein says.

As chairman, he is open to growth through internal development, partnerships, or acquisition. “We are very disciplined in our purchases,” Ein says. “They need to fit strategically and culturally.”

That cultural fit is key to business growth. Ein wants to find operations with “a real commitment to customer service and a relentless pursuit of excellence with a very long-term mindset.” He also wants a commitment to technology.

The Future is Video

Ein strongly believes the future of the security industry is in video, and Kastle’s acquisition of CheckVideo is the proof. CheckVideo’s Exit Sentry, for example, enables airports to monitor areas at a fraction of the cost of human resources. It “watches” people so guards are free to perform other jobs. “Enhanced video is, and will continue to be, the biggest growth area for security services,” he says.

Ein cites the consistent drop in the cost of equipment and the lower cost of bandwidth as two factors that will make enhanced video even more important as time goes on. “The ability to monitor video — not after the fact but to use it pro-actively — is a key,” Ein continues. He likes to call video technology “a force multiplier” meaning that it allows a security operation to gain leverage or traction with its investment and provide better services.

“Video allows you to get a greater investment out of whatever human resources you are using,” he says.

Kastle is 100 percent IP-based and 100 percent cloud-based for its services. The company is proud that it was the first managed services provider to create and launch a solution which met the requirements of Homeland Security Presidential Directive 12 (HSPD-12). In addition to its work with commercial real estate and government agencies, Kastle also is a major player in the education market, serving both schools at the K-12 level and colleges.

The Future

“We are very pleased with the acquisitions we did in 2013,” Ein says. “We will continue if we find others this year or next that make sense.”

Look for the cornerstone of Kastle Systems to remain in the managed access control market for commercial real estate; however, there are no geographic limitations. Kastle will look for opportunities in new markets or to expand its scale in existing markets. “Our goal is to help create security offerings that are more efficient, more effective and less intrusive,” Ein says. He wants to grow the company at double-digits for the next several years.

Part of that will be because of acquisition; however, Ein expects new technology offerings to account for a big piece of the growth in security businesses, as well. Looking down the road, he expects new technologies to be much more prevalent in security offerings and networks than they are today. That is why he intends to keep Kastle Systems focused as a security as a service operation.